A Portfolio of 6 Coffeeshops For Sale By Expressions of Interest

28 June 2010

Savills is pleased to announce the launch of 6 HDB commercial shops for sale by Expressions of Interest.

All 6 commercial shops are located within the matured HDB estates of Ang Mo Kio, Bedok, Bukit Batok, Yishun and Tampines. All 6 shops are fully rented to coffee shop operators and are presently operating as eating establishments. Each of these shops is operating in substantial scale - with each shop having 7 to 13 food stalls excluding the anchor drink stall. All shops do cater for seating capacities of between 200 to 370 patrons spread over the internal and outdoor refreshment areas.

The seating capacities are elastic and can be further enhanced with extra tables and chairs which can be easily added to cater to higher customer volume during peak periods. The shops are all located near wet markets, with good visibility, near transport nodes and have ample public car parking facilities.

The 6 shops collectively have a guide price of around S$65 million, reflecting a net yield (before property tax) of about 5.7%. The shops can be sold either as a single portfolio or individually. Each of these shops is priced between S$4.8 and S$16 million depending on which unit. The existing tenancies will run for another 4 to 9 years – therefore offering a steady income stream over the mid- to long-term. The net yield (before property tax) is expected to grow to above 6% in the near term as committed rents are stepped-up over the tenancy period.

"These investments provide very strong positive cash flow and are solid investments for any investor. Heartland eating establishments are extremely resilient trades. Even in a bad market, business is still brisk as anyone could use a coffee fix for less than S$1 anytime. In addition, Singapore's growing population and affluence will underpin future rental growth for the new investor," said Steven Ming, Director of Investment Sales at Savills Singapore.

He adds, "Many investors are familiar with being a residential landlord but when it comes to eating establishments, they may find it complicated to understand. But the tenancies in these shops have been well structured to minimise hassle and risks for the investor."

This sale of HDB commercial shops as eating houses or coffee shops is rarely handled in an Expressions of Interest sale, much less as a portfolio of 6 properties. It is believed that this is the first time a private portfolio of 6 HDB commercial shops is being put up for sale through an Expressions of Interest exercise.

“Subject to relevant approvals, other commercial or retail uses may be allowed as well. Having a ready portfolio available within matured heartlands will also allow chain retail operations - whether a mini-mart, confectionary etc, to gain a quick presence in the respective locations on expiry of current tenancies," said Mr Ming.

"The coffee shop investment market has long belonged to a niche group of investors. In handling the sale in this manner, we aim to elevate the understanding of this asset class and promote the investment proposition in these shops to a wider group of investors," added Mr Ming.